Your spending behaviour is the foundation of your financial health.  Spending carelessly can disturb your stability. The modern-day materialistic lifestyle makes us spend more. However, later it turns into regret. You must have noticed it too. But this cannot continue for long, else your

Know the signs to stop them on time

Yes, of course. You cannot just keep playing poorly with your finances. Do something to control and stop the spending problems. But first, know about the signs that prove you have poor spending habits.

1)    You usually spend more than you earn

You are earning sufficient to fulfil all basic needs. But still, your bank balance shows zero before the next payday. This is because money is being spent on non-essential things.

Eating out often, impulsive e-commerce shopping, chasing luxury trends, etc., make you spend more. This also blurs the difference between the need and the desire. For example, you have a pending instalment of the loans with no guarantor from a direct lender taken last month. But you choose to spend on a weekend getaway to your favourite place.

Some common indicators –

·        You rely on credit cards to manage the expenses of the month.

·        Your bank balance is zero after a few days, and the month starts.

·        Saving money seems impossible to you despite a regular income.

2)    You shop to cope with stress or emotions

Emotional shopping, which is also known as retail therapy these days, is a big problem. It makes you spend every time you are stressed out, insecure, or have relationship issues.

The urge to spend on things randomly breeds addiction for emotional spending. This can boost your mood for a short while. But soon you realise that it has badly affected your finances for the month. Now you will worry about pending bills, a loan, or a credit card instalment.

Normally, emotional spending happens when you –

·        Feel low or something feels off.

·        Authenticate spending as a stress-buster after a bad day.

·        Shopping feels relieving at the moment, but disappointing later.

3)    You rely on a credit card for daily expenses

Once your income is over after spending on unnecessary things, a credit card is the solution. You use the card(s) for daily expenses like commute, groceries, eating outside, car repair, etc.  But that backfires as the high interest rate of credit cards creates a bigger financial imbalance.

The pending instalments pile up along with the compound interest rate, making the debt bigger. The constant threat of a debt trap is there to affect your mental and financial peace.

These are the warning signs when you –

·        Carry a credit card balance month after month.

·        Use one type of credit to pay off other cards or loans

·        Are not able to pay only the minimum due amount

4)    You have little or no savings

Despite trying a lot, saving seems as complicated as rocket science to you. All thanks to increasing credit card debt after spending on non-essentials. This continues month after month, turning finances topsy-turvy.

Without the right direction to spend, money gets absorbed by daily expenses. This makes you struggle with the basic needs after a certain time.

This happens if you –

·        Live paycheck to paycheck.

·        Feel like taking more loans for emergency expenses

·        Feel that your long-term goals are difficult to achieve.

5)    You don’t check your financial statements

Yes, you don’t want to check your financial statements. You know they are going to show spoiled finances due to poor money management. A fear is there in your mind because it will be only about how extravagantly you spent on things.

However, it will be of no help to ignore your financial statements. To improve things, you need to have a look at your circumstances well. Financial avoidance is the first mistake and factor behind spoiled finances.

Indicators of avoidance include –

·        Turning off credit card or bank notifications.

·        Ignoring conversations about your finances

·        Delaying bill or debt payments despite having money.

Why are spending problems common these days?

For a number of reasons, spending problems have increased. Most importantly, paying for things has become considerably easier. Online shopping, credit cards, buy-now-pay-later, etc., make shopping comfortable. This makes you disconnect emotionally while paying for something.

When you pay in cash and take out money from your wallet, it feels heavy. This is because you can see the cash reducing in front of your eyes. Next time, your mind thinks twice before taking out the money again.

But today, even the inexpensive things are available on instalments. This makes spending easier and even fun. As a result, it is simpler to forget about the necessary expenses. As a result, pending debts, a poor debt-to-income ratio, and an income expense imbalance occur.

How small expenses turn into a big problem?

The expenses that happen daily or on a regular basis but are not necessary affect your finances. Small choices of spending on non-essential things gradually start creating issues. You are out of funds in the middle of the month, and your credit score drops due to pending payments.

Examples of how small spending turns things upside down

·        Buying things without a list – This makes the shopping random and limitless. Also, it makes tracking expenses difficult.

·        Thinking ‘it’s only a small amount’- It always intensifies the urge to spend more. A small packet of fries, an expensive jewellery piece, it can be anything.

·        Spending first and saving later – you need to save first and spend from what is left. Prioritising savings is necessary.

·        Ignoring the number of subscriptions – You are not at all worried about how many subscriptions, including those unused ones, you have.

How to fix the poor spending behaviour?

The best solution is to fix the spending pattern and get back to earning financial stability. Here are some suggestions applicable practically.

·        Track expenses – Start doing it right away. Yes, this seems like a simple suggestion, but it is considerably effective. Initially, track on a daily basis and then do it weekly and then monthly.

·        Set spending limits – This may also mean budgeting. Decide the amount you need to spend on things. Apply limits on discretionary spending. This shows a fast and good change.

·        Stop spending on non-essentials – Eating out often, purchasing new clothes, are never part of the basic needs. Avoid them completely until your finances are back on track.

·        Start saving regularly -  Start to save money, maybe small initially. Yes, it can be difficult as every good change takes a little time. But soon you can find things working in the right direction. 

·        Prirotise bill and debt payments – With already spending more, you need to work more on timely debt payments. Loans too are easier to get these days due to the online speedy process. But repayments make you forget the discipline. You can take the loans with no guarantor from a direct lender in a jiffy with an instant decision. But don’t forget to repay on time once you use the funds for a real need.

Conclusion

After a detailed analysis above, you can spot the loopholes and solutions to fix them. Start working on them today because delay only causes more financial issues. Spending money is fine, but mindless spending is not a good thing. Follow the suggestions above and see your finances get back on track.